Airfares Soar As Foreign Airlines Hike Exchange Rate
International airfares on Nigerian routes have gone up further by over 20 per cent after foreign airlines raised the exchange rate for ticket sale from N462 per dollar to N551 per dollar, findings by The PUNCH have revealed.
International travellers on Nigerian routes have been paying higher airfares after carriers blocked their inventory of cheaper tickets in order to cushion the effects of the rising amount of trapped funds
The latest increase in the naira-dollar exchange rate for ticket sale by the International Air Transport Association, the Switzerland-based trade association of the world’s airlines, is expected to worsen the plight of Nigeria travellers who are already paying higher airfares.
Multiple travel companies confirmed to our correspondent on Friday that global distribution system companies had notified them of the latest increase.
They said the development was not unconnected with the difficulty faced by foreign carriers in repatriating their ticket sale proceeds out of Nigeria.
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According to travel agents, the increase in the exchange rate has led to an over 20 per cent increase in international airfares.
“Virgin Atlantic which has a promo of about N800,000. This same promo is going for about N1.1m as a result of the increase in the exchange rate,” the chief executive officer of a travel agency, who chose to speak on condition of anonymity, said.
As of January this year, foreign airlines flying into Nigeria had about $743m in trapped funds in Nigeria. IATA has said Nigeria has the highest amount of foreign airlines’ trapped funds globally.
Stakeholders and travel firms have however emphasised the need for the Federal Government to direct the CBN to expedite the release of the trapped funds.
A former President of the National Association of Nigerian Travel Agents-the trade body for local travel agents-Mr Bankole Bernard, who also confirmed the latest increase in IATA’s exchange rate for ticket sales, said the Federal Government needed to honour the provisions of the Bilateral Air Services Agreement signed with foreign countries particularly as it affects the repatriation of funds.
“Today, the rate at which we are issuing tickets is N551 to a dollar. Is that the official rate? No, but that is the rate we are issuing tickets, which is moving closer to the black market rate. This means the issue of trapped funds would not have been if it had been properly managed,” he said.
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“The funds became trapped because we (the government) were not ready to give foreign airlines funds at the official rate. Why didn’t you tell them the rate you would give them funds so that they can sell their tickets at a particular rate as long as it is official? After all, we have multiple exchange rates. So, what will make this one different? Then, there will not be an issue of trapped funds and people will do their business and the agony travellers are facing will not be there.”
The Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, a research firm, said foreign airlines could not be blamed for the latest increase in the exchange rate.
He said, “In dollar terms, airfares have not gone up, It is still the same amount. The increase will only affect those who buy their tickets in naira. But we can’t blame foreign airlines. We need to put ourselves in their shoes. Why can’t they repatriate their funds? They are losing money by not being able to repatriate their funds. Most of their expenses are denominated in dollars, how will they pay for all these services and goods when they can’t repatriate their funds?”
IATA had a few weeks put foreign airlines’ trapped funds in Nigeria at $743,721,097 as of January 2023.
IATA disclosed this in a letter addressed to the Minister of Aviation, Hadi Sirika, and signed by its Area Manager for West and Central Africa, Dr Samson Fatokun.
IATA urged the minister to intervene and ensure the resolution of the issue of airlines’ blocked funds in Nigeria.
The letter read in part, “For over a year, Nigeria has been the country with the highest amount of airline-blocked funds in the world. Please find attached the comparative table of airlines’ blocked funds by country. Moreover, as of January 2023, airlines’ blocked funds in Nigeria have increased to $743.721.092 from $662m in January 2022 and $549m in December 2022.”
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While highlighting the social-economic impact of the airline-blocked funds in Nigeria, Fatokun said the increasing backlog of blocked funds of international airlines would impact negatively the foreign direct investment in the country, at a moment the country was expecting investment in the concession of some of its major airports.
He also noted the continued delay in allowing foreign airlines to repatriate their funds violates BASA.
Sirika later promised that the Federal Government would ensure the backlogs of unremitted funds were paid.
He was not specific on when this would be done. The Central Bank of Nigeria had a few months ago released part of the trapped funds. Since then, however, the central bank appears not to be looking in the direction of the foreign carriers as the amount of trapped funds rises on daily basis.
The President of the Association of Foreign Airlines and Representatives, Mr Kingsley Nwokoma, said IATA reviews exchange rates periodically, adding that the current increase might have passed through necessary steps.
According to him, foreign carriers have been finding it difficult to repatriate their funds, noting that this has made doing business in Nigeria very difficult.
NNPCL Withheld N8.48trn Oil Subsidy Since January 2022 – RMAFC
The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) has accused the Nigeria National Petroleum Company Limited (NNPCL) of withholding N8.480trillion.
The commission said the NNPCL withheld the sum meant for the Federation Account, as petrol subsidy, from January 2022 till date.
A statement on Thursday by RMAFC Chairman, Mohammed Shehu suggested that the subsidy regime was shrouded in secrecy.
Shehu said the scrapping of oil subsidies by President Bola Tinubu, a decision he announced during his inauguration on May 29, was a good move.
“Since January 1, 2022, to date, the Nigeria National Petroleum Company Limited (NNPCL) has not been contributing to the Federation Account due to the claimed subsidy payments.
READ ALSO: Nigeria Earned N109.6trn Non-oil Tax In 12 Years – NBS
“The total amount withheld by the NNPCL as claimed subsidies for this period amounted to N8,480,204,553,608,” the statement reads.
The figure reported by the Office of the Accountant General of the Federation (OAGF) “is yet to be reconciled by the RMAFC, OAGF, and NNPCL”, Shehu noted.
The RMAFC chief said in a situation where subsidy transactions are not transparent, “it would be unwise to sustain the phantom payments of subsidy.”
He expressed optimism that the subsidy removal would eliminate uncertainty surrounding the subsidy regime and avail funds for the execution of critical national projects.
Shehu further charged the President to go after economic saboteurs “who have contributed to the nation’s economic woes.”
Nigeria Earned N109.6trn Non-oil Tax In 12 Years – NBS
The National Bureau of Statistics (NBS) has revealed Nigeria earned N109.6 trillion from non-oil taxes in 12 years.
The federal agency gave the breakdown in its latest report titled “Tax-To-GDP Ratio.”
The document noted that between 2010 and 2021, Africa’s most populous country earned N25.1 trillion from oil tax.
According to NBS, Nigeria collected N6.8 trillion in 2010, N9.4 trillion in 2011, and N8.4 trillion in 2012 as non-oil taxes.
Non-oil taxes earned the nation N9.2 trillion in 2014, N7.8 trillion in 2015, and N7.1 trillion in 2016.
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Furthermore, Nigeria generated N8.7 trillion in 2017, N10.6 trillion in 2018, and N12.5 trillion in 2019 from non-oil taxes.
However, the country collected N2.4 trillion from oil taxes in 2014, N1.4 trillion in 2015, and N1.2 trillion in 2016.
NBS added that the total tax revenue from non-oil taxes in the period under review was N142.4trillion
UK Clamps Down On Cryptocurrency Sector
Britain’s financial regulator on Thursday tightened rules over the promotion and selling of cryptocurrency as it seeks to protect consumers.
The Financial Conduct Authority unveiled a package of measures for the industry, which has long faced criticism over the lack of oversight — and promises of high returns in a volatile marketplace.
Under the new rules, companies promoting crypto products or services in Britain must from October give a “clear warning” that customers could lose money in “high-risk” investments.
READ ALSO: US Accuses World’s Largest Crypto Platform, Binance Of Illegal Operations
Marketing firms must also introduce a cooling-off period for first-time crypto investors.
FG put MDAs’ payments on hold
And the watchdog will also ban “refer a friend” bonuses that are designed to incentivise crypto investing.
“Our rules give people the time and the right risk warnings to make an informed choice,” said Sheldon Mills, head of consumers and competition at the FCA.
The announcement comes after Britain introduced legislation earlier this year to bring crypto promotions under the scope of the FCA.
READ ALSO: US Accuses World’s Largest Crypto Platform, Binance Of Illegal Operations
UK lawmakers are also demanding that crypto investments in Britain be regulated, in much the same way as the country’s gambling industry.
Reacting to the FCA announcement, the director of operations at industry group CryptoUK, Su Carpenter, said the new rules could prevent fresh entrants.
“There is a risk that this solution will both unfairly concentrate market power for those firms which are already authorised and potentially encourage unauthorised firms to operate from outside of the UK,” Carpenter said.
That could, in turn, create “a competitive disadvantage for UK-based organisations and also potentially undermining consumer safeguards”, she added in a statement.
The FCA clampdown follows moves toward tighter regulation in the United States.
READ ALSO: Bitcoin Slumps Below $23,000 In Crypto Crash
The Securities and Exchange Commission on Tuesday sued crypto platform Coinbase, charging that the largest US digital currency trading platform made billions of dollars by “unlawfully facilitating the buying and selling of crypto asset securities”.
The SEC has this week also unveiled charges against Coinbase peer Binance and its founder Changpeng Zhao for numerous alleged securities law violations.
The news follows the spectacular failure of crypto exchange giant FTX in November, stoking concern over a market dubbed by some critics as the “Wild West”.
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